Exercise 13-12 (Indirect Method) The comparative unclassified statement of finan

Question

Exercise 13-12 (Indirect Method) The comparative unclassified statement of financial position for Puffy Ltd. follows: PUFFY LTD Statement of Financial Position December 31 2015 Assets Cash Accounts receivable Merchandise inventory Land Equipment Accumulated depreciation Total assets 2014 $50,200 $24,970 79,200 182,560 186,730 71,030100,980 265,420 202,690 (65,450) (30,350 $588,310 $564,220 84,550 Liabilities and Shareholders' Equity Accounts payable Bank loan payable Common shares Retained earning:s Total liabilities and shareholders' equity $39,430 $46,530 145,270 210,610 199,550 174,920 204,060132,160 $588,310 $564,220

Explanation / Answer

note: cash outflows are shown in brackets ().

statement of cash flows indirect method

year ended december 31 2015

cash flow from investing activities net profit $112,770 Adjustments to reconcile profit to net cash provided by operating activities depreciation expense $35,100 gain on sale of land (5,190) increase in accounts receivable (84,550 - 79,200) (5,350) decrease in merchandise inventory (186,730 - 182,560) 4,170 decrease in accounts payable (46,530 - 39,430) (7,100) 21,630 net cash from operating activities 134,400 cash flow from investing activities Purchase of equipment (62,730) sale of land (100,980 - 71,030 + 5,190 gain) 35,140 net cash from investing activities (27,590) cash flow from financing activities issue of common shares 24,630 bank loan repaid (65,340) dividends paid (net income - (ending retained earnings - opening retained earnings) => (112,770 - (204,060 - 132,160)) (40,870) net cash from financing activities (81,580) net cash from all activities (134,400 - 27,590 - 81,580) 25,230 add: opening cash balance 24,970 closing cash balance 50,200

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